This entrepreneur made his own VP fall asleep

The story: If you make the VCs fall asleep, you probably are not off to a good start.

The Wall Street Journal tells the tale of a meeting where a CEO pitching VCs was rudely interrupted by the snores of his own suddenly sleeping VP of Ad Sales.

The reaction: According to WSJ.com, "It probably goes without saying, the company failed to attract funding from Canaan."

The lesson: “The CEO kept blazing through his pitch, acting like it wasn’t happening,” Canaan’s director of marketing, Gina Vakili told WSJ.com. “If there’s an elephant in the room, we should all acknowledge it.”

This entrepreneur dressed like an avocado

The story: There probably isn't anything less appetizing to a VC than someone dressing up as green, mushy food. But that didn't stop one lady who showed up at New York VC Steve Brotman's office dressed like an avocado.

This entrepreneur thought he was special and the rules didn't apply

The story: Seth Levine of Foundry Group has a strict policy against signing non-disclosure agreements, but one sassy entrepreneur thought they should be the exception to the rule.

"Seth…..I’d like to pitch you on a start up," an entrepreneur emailed. "I need the help of someone like you. I haven’t filed any patents yet and I need a nda signed. can we do it?"

Levine responded politely, informing the entrepreneur that he doesn’t sign NDAs and offering him a chance to speak about the project without one. The individual replied:

"Seth….I’m reaching out to you here, lets get off this old cookie cutter vc "don’t sign nda’s" attitude, it’s only until the patents are filed. I believe I’ve got one of the biggest deals to come down the pike in years. This isn’t my first rodeo. Just FYI, no matter how hard you crunch the numbers, this is a 20+B per year deal. I already have demo software and I need you to help me put a team together, the money will come as soon as we are able to "show and tell" so to speak. Please reconsider."

The reaction: “Really? That’s how you’re engaging with me?” Levine writes in his post. “Am I supposed to be bowled over by how amazing this potential opportunity might be, change a cardinal rule of our business and through this series of emails think that you’d be a competent manager, effective advocate for your business and a good guy to work with?”

The lesson: No matter how great your idea may be, don't expect VCs to make an exception for you. While your business may be the most important thing in your life, try to remember it isn't in theirs and they're doing you a favor by giving you a meeting in the first place.

This entrepreneur was told to go back to the bank he quit and ask for his job back

Village Vines co-founder, Dan Leahy, was so unimpressive to one angel that he was instructed to crawl back to Wall Street.

The story, from Dan himself: This time last year, Ben McKean and I made a trip to Boston to meet with some contacts we thought might be interested in investing. To give you a sense of timing, we’d recently left our full-time jobs to dive headfirst into building VillageVines, and we were putting together a prototype of the site with a small Boston-based design team.

We were still in the conceptualization phase – we had a handful of New York and DC restaurants who bought into the concept and said they were interested in signing up once they saw the site, but there weren’t any concrete proof points besides market data we put together that (we hoped) illustrated the enormity of the opportunity we were chasing. Our goal was to get a few people excited enough to provide us with the seed funding to keep the business going once our savings ran out. And we only had a few more months.

This meeting was with a Boston businessman /angel investor who Ben knew from his hometown. He had relevant experience in the small business B2C space, with over 10 years doing Yellowpages / directory assistance related businesses. He also had an entrepreneurial background, which we hoped would help to get him excited about our venture and ultimately give us some much needed capital.

We were way off.

Throughout the meeting, he was dismissive of our concept, of our market and of our plan of action. In hindsight, we probably should have recognized that there was a fundamental difference in perspective that made pushing the conversation forward an exercise in futility. However, that’s said with the hindsight of knowing that our business actually does work, and works well - at the time his condemnations of our concept sent shock waves of anxiety through Ben and me.

His premise was that people would always rely on paper yellow pages to find businesses, and a concept for helping small businesses market themselves online had too many hurdles to overcome.

The reaction: As we painfully crawled toward the end of the meeting, he sat up and said “you know what, I’m going to offer you guys a piece of advice.” We perked up, hoping he might deliver us something that would make this meeting worthwhile.

“A lot of people will tell you that persistence and stick-to-it-iveness is what’s going to make you a successful entrepreneur. That’s BS. If you want my honest opinion, if I were you guys, I’d go back to the banks you left, and ask them for your jobs back. You don’t want to throw it all away for this.”

Ben and I didn’t exchange a word the entire trip back to the city (via BoltBus, naturally). At our stage, when the ‘will this really work’ question was a perennial concern, his words were beyond frightening. We disembarked outside Penn Station, looked at each other and knowingly exchanged a ‘let’s just talk tomorrow’ look.

The lesson: Anyone who’s started his or her own business will attest to the dramatic intensification of your emotional highs and lows. It’s hard to even explain; the net effect is no doubt a positive in that you’re truly passionate about what you’re doing every day, which benefits countless facets of your life and well-being, more than I ever imagined before jumping in. That said, before launching VillageVines, I never once felt pits in my stomach and suffered through the sleepless nights that accompany the ‘is this going to work’ question. It can be absolutely killer.

Not surprisingly, this guy didn’t invest. In fact, beyond a courtesy follow-up thank you email we sent, we haven’t heard from him since. We were able to raise a seed round, though, and after launching VillageVines in New York late last spring we’re now going strong in 5 cities, have a terrific team of 12 working tirelessly day and night to push our business forward, and we’re driving millions of dollars in incremental sales to our restaurant partners. Ultimately we learned that while advice from people who’ve done it before can at times be valuable, putting too much stock in their views can needlessly distract your focus, or even worse, frighten you into giving up on your dream.

This entrepreneur babbled on about useless details for an hour

The story: “One CEO spent 45 minutes on the first slide telling the story of how the company and founder team was formed, and how the idea was generated." recalls Don Rainey, of Grotech Ventures.

"The meeting ended in an hour without the CEO spending time on the market, projections, capital strategy or exit strategy.”

The reaction: “No deal.”

The Lesson: What should the entrepreneur have done instead? Rainey says, “I coach CEO's to tell their story 3 times… first an overview in 3 minutes, then same material in greater detail for 10 minutes and then the full story for a third time in 35 minutes. If people hear the story 3 times in 45 minutes, they understand it better. It also means that a deal is unlikely to get passed on over a lack of understanding.”

This entrepreneur tried to get around an NDA

The story: What's worse than insisting on an NDA? Insisting on an NDA and then trying to talk about your company anyway.

Says one VC: “When [one] entrepreneur came in and pulled out an NDA to start the meeting. I explained to him why I wouldn’t sign it and he spent the next 10 minutes walking around the business idea [without] really telling me about it."

The reaction: The VC ended the meeting immediately.

The lesson: If a VC refuses to sign an NDA, they’re not going to bend just for you. Either let them in on what you’re doing, or find another VC who doesn’t care.

This entrepreneur showed up late

Rennette Stowe via Flickr

The story: Another way to piss a VC off: showing up late.

“While in NYC for a conference, a CEO implored me to step out of the proceedings for an hour to hear his pitch,” says Rainey. “I did so, [and] he was 45 minutes late for the meeting.

The reaction: Obviously, no deal.

The lesson: Show up on time. A VC's time is valuable, and they made room in their schedule for you.

This entrepreneur insulted the VC

The story: By all means, avoid insulting one of the firm’s portfolio companies.

Rainey shares a story of one startup executive, Mike, who “harangued” him for 15 minutes before the first meeting began about the negative environmental impact of one of their companies.

The reaction: Naturally, “when the CEO finally made it, I was mildly angry," says Rainey. "Not a good starting point." What's worse, Mike's role in the company was just to help the CEO raise money.

The lesson: Don't say anything that could come across as bashing a VC or their work. Also, if you're the CEO, be confident about who accompanies you to pitches. You need to make sure they will positively represent you, even when you're not present.

This entrepreneur was left with the bill for a lobster dinner

Keith Cowing, founder of SeemlessReceipts, thought he was going to get advice from a VC's consultant, but got a bill for a massively expensive dinner instead:

The story: When I was first raising money for Seamless Receipts, I talked to a number of venture capital firms and early-stage investors. At the end of one pitch, a VC introduced me to an "independent consultant" who could provide expert advice, put us in touch with early customers, and perform some of the VC's diligence. The consultant had been a partner at a big firm, had served on the boards of several successful companies, and looked great on paper.

I emailed the consultant to setup the meeting, including myself and my business partner. He responded by forwarding me a dinner reservation at an expensive restaurant in New York the following night. This was rather unusual. We hadn't even setup a day and time for the meeting and here was a PDF copy of a restaurant reservation. As a scrappy entrepreneur, I tend to eat at restaurants that have dollar menus. But I figured he would pay if he made the reservation. Worst case I'd pay my share and it was a worthwhile expense for his time, which was clearly valuable.

We met for dinner the next day (his schedule seemed awfully flexible). He happily ate his food, but was more interested in the New York party scene than our business. We couldn't get him to muster up any logical feedback or provide any value during the discussion. Then there was the finale, he left us with the bill for his lobster dinner. I was aghast! This was worse than a pay-to-pitch scheme. We paid for the expensive dinner that this guy set up, he wasn't even a potential investor, and he had no expertise that I could discern. What kind of "successful" business person makes a young, budget-conscious entrepreneur buy him lobster dinner?

The reaction: Cowing writes: "I have a lot of respect for most VC's and consultants I've met. But this was ridiculous. I wanted to launch a nasty email to the consultant and the venture partner who made the introduction, but I decided to cool off and simply move on to my next slew of meetings. I won't be meeting with him again, and I will give an honest assessment of his character when asked. But it's a small world and your reputation is more important than anything, so I'm careful with my reactions."

The lesson: After getting burned, here is Cowing's advice to avoid his same fate:

You should approach the fund raising process with the same discipline, focus, and rigor you use to build a product. This means constantly prioritizing your time. There are tons of investors, "experts", and entrepreneurs you can talk to. There are plenty of people masquerading as each as well.

So make a giant list of people and firms, track it, trim it down to those who can be great partners, and spend your time accordingly. Identify the bad apples as fast as possible, toss them aside, and don't look back. The sooner you develop meaningful relationships with people in the venture community, the more you can triage your schedule (and cut out people who will waste your time), I might have gotten stuck with a useless meeting and a bill for a lobster dinner, but I won't get stuck twice.

This entrepreneur was cheesy and painful

The story: Don’t forget to fully engage with the VCs you’re pitching.

Mark Suster, of GRP Partners, recallsan entrepreneur whose fatal flaw was that he failed -- even refused -- to personally engage with an entire room of VCs for the entirety of his pitch.

That included starting off with a 5-minute “highly produced Hollywood-like” video that did little to explain what his company actually did.

“I kept thinking two things during the video: 1) this is cheesy and painful and 2) why is he giving up the opportunity to build rapport with us by telling us this stuff directly?” Suster writes.

Even worse, when Suster asked the individual to stop the video early, the entrepreneur was reluctant to discuss even basic issues about his company, from his target customer to potential risks.

The reaction: “Basically, the fundamental problem that I saw with the whole painful hour was that he was in ‘sales mode’ the entire time,” Suster says. “He was so concerned with getting across his points that he failed to have a dialogue and engage us.”

The lesson: While your presentation should be engaging, be confident in your own social skills. VCs are investing in you as the CEO, as well as the idea. You are the company you represent. And, “there is NEVER a scenario where you should lead with a 5-minute video,” Suster adds adamantly.

This entrepreneur had too many features

The story: Jared O'Tool, co-founder of Under30CEO.com, overwhelmed VCs with his pitch and received a room full of blank stares.

He explains:

About 2 years ago I was pitching VCs on a business plan we had made before Under30CEO was around. We thought it was the next big thing and spent hours creating the idea and how the service would work online. Then we went to the VCs.

Problem: To many features. We thought it was great that we had incorporated all these fun features to the service all these ways people could share, react and get involved. What we failed to do was talk about and make the actual service and the target market clear at all.

The reaction: "The VCs were generally confused on the whole project because we spent more time trying to explain features than explaining the core offering and why people were going to use it," O'Tool recalls.

The lesson: O'Tool advises: "Focus on the core and the market. Tell VCs what your doing and why people need it. An investor does not want a project that needs a revolutionary feature or promotional tactic to work. They want a project that fills a need in the marketplace, simple as that. How it will be delivered, promoted and the fun features are all secondary and cloud the actual core business."

This entrepreneur thought he could change the world

The story: Mark Cuban writes about one of the worst pitch letters he's ever received. This person did just about everything wrong, as Cuban points out in bold.

"My name is John Doe, CEO and Founder of John Doe Unlimited Innovations and Technology, LLC."

The first thing I do at this point is look at the senders email address. Is it an email with the company name in the URL ? If it isn't.. ding, ding, ding. They sender has come up with a name, but doesn’t have the focus or confidence to put up a website. This person was using a gmail account.

"JDUIT is an innovation conglomerate, designed for many different industries and is dedicated to improve the quality of life for individuals throughout the world, one step at a time."

Im sorry, but could anyone possibly invent and write anything that is more full of shit than this person? If you want to get someone interested in your company, DO NOT tell them you are going to save the world. You are not.

"....In addition, Famous Person is our President and Co-Founder."

If you have someone who is famous, which suggests they are wealthy, or who actually is known to be wealthy, involved in your company and you are pimping that person in order to increase my interest, I will tell you what goes through my head: If this is such a great fricking idea, why aren’t they funding the entire thing? The fact that your famous friend doesn’t think enough of the idea to keep it all to you and him/her tells me I should be very, very careful.

"We have designed a perfect plan...[blah blah blah for 10 more lines]."

Reminds me of a line from a DMX song… “talk all day and say nothing”. At this point I am reading this email and actually smiling, thinking it must be a joke.

"Attached is a copy of our executive summary. If you could be so kind as to take a moment of you time to overlook it, I am positive you will be as enthusiastic as I am for an opportunity like this. I look forward to speaking with you soon and the possibility of a working relationship. Once again, thank you for your time and consideration. Have a wonderful day. God bless."

The above is acceptable. At least they are polite.

Im not going to show the entire executive summary. I don't want to give away the company, but I will share some lowlights.

"II. The Mission JDUIT intends to ignite the next generation of living, providing groundbreaking solutions to current economic issues, while continuing to encourage people to grow with everexpanding innovations. It is a lifestyle. We will not only make life easier, but dramatically improve the quality of living by helping people rethink their lifestyle choices. We do not merely seek to expand our business volume, but we are dedicated to the use of our unique, advanced technologies to contribute to the safety, benefits, and welfare of people worldwide. Our success is directly linked to the prosperity of our customers, management, employees, investors, partners, advisors, and shareholders; the entire JDUIT family."

Now if this isn’t a mission statement that makes you want to get out your checkbook, I don’t know what is.

The lesson: Cuban writes:

If you are an entrepreneur who is looking for capital and is sending letters or emails of introduction, leave out the Bullshit. Say who you are. What you have. What makes it different than the competition. What you want to accomplish. How you plan on getting there and how I can help. Everything else will usually hurt more than it will help.